1. claims transformation Programme UPDATE LMG 18 th November 2010 Lloyds Performance Management Directorate

2. © Lloyds2 Agenda Transformation vision Core components 2010 Pilot Pilot Performance Transformation Programme 2011 Enhanced Governance Claims Business Systems Options Claims Talent Initiative Consultation

3. © Lloyds3 Vision for Claims within Lloyds market Lloyds reputation for fast and fair claims handling Deliver professional excellence Excellence in Underwriting Excellence in Claims Excellence in Operations Capital advantages Security and strong market ratings Global brand Lloyds Competitive Advantage

4. Core Transformation Components Enhance current segmentation – increase efficiency Introduce choice Strengthen Corporations governance role Review Claims Business Systems Options Increase flexibility in notification and settlement Designed to deliver: Better customer experience/more transparency More scope for differentiation Commencing with 2010 Pilot

5. New ECF claims on new contracts incepting on or after 01-01-2010 For defined risk codes, excluding Binders and Singletons Marine (excluding Cargo and Energy), Property Direct & Fac, Casualty Treaty All subject to the 2010 Pilot Claims Scheme Three tranches: Standard (£0-100k), Mid (£100k-5m) and Complex (>£5m) Pilot Framework Segmented claims response Provision of choice

6. © Lloyds6 Success Criteria Four key measures: 1. Speed 2. Quality 3. Market Perception 4. Cost Speed considered the most important measure Pilot deemed a success if claims handled 25% more quickly, provided that pilot performance in each of the other areas neutral or improved

7. © Lloyds7 Pilot Volumes as at Q3 2010 2,500 Pilot Claims & 4,500 fully completed transactions Class of Business dynamics: Marine (46%) Property D&F (45%) Casualty Treaty (9%) Categories: Standard 82% Mid Tranche 15% Complex 3% Segmentation ratios in line with expectations

8. © Lloyds8 CTP Pilot Performance - Overall

9. © Lloyds9 Pilot Score Card Overall reduction in end-to-end transaction times – exceeds target Reduction in average response times across all parties Standard tranche - average end to end transaction time reduced Triage accuracy rates are up Quality of claim assessment up (mid/complex) Pilot working group to discuss impact arising from new roles of leader, 2 nd lead and XCS Training for the market and revised Pilot guidelines will be developed to address issues identified Pilot results are proving the concept of segmentation & choice

10. © Lloyds10 Transformation Programme – 2011 Full 2010 year results to be assessed by Lloyds early 2011 Consideration of any expansion will be made Enhanced governance framework will be shaped End vision implementation plan published early 2011 Volume claims service standards (published Q1 2011) Framework for approval of delegated lead and 2 nd service providers (Q2 2011) Claims Talent initiative being launched Pilot continues into 2011

11. © Lloyds11 Enhanced Governance Framework Revised and enhanced Minimum Standards Lloyds claims service targets Service provider approvals Performance audits & wider reviews Enhanced & targeted MI With Lloyds continuing to: Invest in more talent Provide claims leadership Raising the bar

12. © Lloyds12 Claims Business Systems Options Modern technology is critical to providing a competitive claims service Flexibility is vital Importance of this project can not be underestimated In 2009: - the Lloyds Claims Team defined the markets business requirements - conducted a tender process based on those requirements The Future Processes Project is now validating this work on behalf of the London Market It is critical that the pace of this work does not diminish

13. © Lloyds13 *Talent Initiative – 50 professionals over 5 years Graduate: 12 month programme Provide fundamental understanding of insurance principles with core focus on claims Utilisation of variety of development methods, including hands-on experience 4 x 3-month Placements Lloyds Broking House Managing Agency Law Firm / Loss Adjuster Market Practitioner: 12 month programme Aimed at current adjusters with 2-5 years claims handling experience Participants alternate between formal training at Lloyds, mini market placements (~2 weeks) and project work Modular approach: Lloyds The Market Legal Aspects of Claims Handling * subject to ratification by Market Steering Group Examinations: LLMIT & CILA / DipCIIExaminations: ACII

14. © Lloyds14 In closing…consultation with stakeholders Ongoing market consultation remains vital Managing agents Brokers LMACC Future Processes Working Group LMG XCS LMA sector groups Service providers/experts Lloyds market is committed to continuous improvement

15. © Lloyds15 Analysis of ECF data and discussions with Pilot working group to discuss issues arising from new roles of leader, 2nd lead and XCS Training for the market, discussions with XCS and revised Pilot guidelines will be developed to address issues identified